INDIA REPORT
Hybrid vehicles are gaining traction in India as a practical alternative to fully electric vehicles (EVs), a trend driven by strategic manufacturer initiatives, evolving consumer preferences, and infrastructural and policy challenges.
Major automakers like Maruti Suzuki, Toyota, Nissan, Hyundai, and Kia are launching hybrid models to meet the increasing demand for fuel-efficient and environmentally friendly vehicles. Hybrids offer a balanced solution, providing the benefits of both internal combustion engines and electric powertrains without the range anxiety associated with EVs.
Despite higher taxes on hybrids compared to EVs, the slow development of EV infrastructure and long waiting periods for EVs make hybrids a more viable option for many consumers. The hybrid market is expected to continue its growth, supported by ongoing innovation and potential policy adjustments to reduce costs, positioning hybrids as a crucial component in India’s journey towards sustainable transportation.
Source: Fortune India Read The Article
Strategic Moves by Manufacturers. Car manufacturers in India are focusing on hybrid vehicles to cater to the market’s evolving needs. Maruti Suzuki, in collaboration with Toyota, plans to introduce hybrid models like the Maruti Innova HyCross and Toyota Urban Cruiser HyRyder. Nissan is set to launch hybrid versions of its X-Trail and Qashqai models. Hyundai and Kia are also entering the hybrid segment with plans to launch hybrid SUVs by 2026, marking a strategic pivot from their initial emphasis on EVs due to slower-than-expected adoption rates in India.
Consumer Preferences and Market Dynamics. Hybrids are becoming popular among Indian consumers because they offer better fuel efficiency and lower emissions without the range anxiety linked to fully electric vehicles. They provide a practical solution by blending traditional internal combustion engines with electric drive capabilities, making them an attractive choice in a market where the EV charging infrastructure is still under development. The affordability and convenience of hybrids are key factors driving their increased adoption.
Market Performance and Projections. Hybrid vehicle sales in India have seen significant growth, with a 38% increase in fiscal Q1 2024, capturing a 2.1% market share. This growth surpasses that of EVs, which experienced a slight decline in the same period. Globally, hybrids are also witnessing faster sales growth compared to EVs. This trend is expected to continue, driven by new hybrid model launches from major automakers like Hyundai, Kia, and Toyota, which currently leads the hybrid market in India.
Infrastructure and Policy Considerations. The slow development of the EV infrastructure and the high Goods and Services Tax (GST) on hybrid vehicles (43% compared to 5% for EVs) are significant barriers to the widespread adoption of fully electric vehicles in India. Reducing the GST on hybrids could make them more affordable and accelerate their adoption. This policy adjustment would support achieving carbon reduction goals by providing an immediate, practical solution rather than waiting for the EV infrastructure to fully develop. Investments in hybrid technology and components further support the transition to more sustainable transportation solutions.
Conclusion. The growing preference for hybrid vehicles in India is driven by strategic manufacturer initiatives, consumer demand for practical and cost-effective solutions, and the current limitations of EV infrastructure. With ongoing innovation and potential policy adjustments to reduce the cost burden on hybrids, this segment is poised to play a crucial role in India’s journey towards electrified and sustainable transportation. The increasing acceptance of hybrid vehicles reflects a significant shift towards greener and more sustainable automotive technologies in the Indian market. PSR
Aditya Kondejkar is Research Analyst – South Asia Operations for Power Systems Research
